TOKYO -- Sony has posted its all-time biggest operating profit for the first quarter and stands in striking range of realizing record black ink for the full year. But the numbers rest mainly on the cyclical chipmaking business, whereas the entertainment segment remains a question mark.
Tense from all the success
The Japanese conglomerate reported Tuesday a group operating profit of 157.6 billion yen ($1.43 billion) for the April-June period, nearly triple the year-earlier figure. Sony's last record for that period occurred during the fiscal year ended in March 2008.
However, "we didn't reach 500 billion yen during that full year," Kenichiro Yoshida, the executive deputy president, told reporters the same day, referring to the stated goal for the current fiscal year.
"A sense of tension must be maintained," the stern-faced executive added.
President Kazuo Hirai and right-hand man Yoshida have put Sony through years of restructuring in order to reap 500 billion yen for the first time in two decades. Achieving that feat would serve as a coda to those efforts.
"It's only three months," Yoshida warned. "The most important thing is that our senior management does not lose its crisis mentality."
The black ink was earned on 1.85 trillion yen in sales, up only 15% from a year earlier. Net profit nearly quadrupled to 80.8 billion yen, but largely because the impact from last year's Kumamoto earthquakes receded.
The quarterly operating profit outpaced the average market estimate by nearly 20%, and Sony sees annual operating profit soaring 73%. The company kept its guidance in place due to caution over currency and interest rates.
On the other hand, Sony upgraded full-year projections for the gaming, semiconductor and digital camera segments by a combined 32 billion yen. Simple arithmetic suggests that fiscal 2017 profit would surpass the record 525.7 billion yen made in fiscal 1997.
Sony, past and present
Sony's profit drivers have changed drastically over the past decade. Back then, the Cyber-shot point-and-shoot cameras and Handycam camcorders were the big sellers. There was also the PlayStation 3, but associated costs put the gaming segment in the red. The Cell microprocessor, which powers such game consoles, had seen better days.
Now Sony has shifted toward high-end consumer electronics, such as high-definition 4K televisions and single-lens reflex cameras. The semiconductor business owns the top global share in smartphone image sensors.
The gaming segment's operating profit shrank 60% in the first quarter due to the lack of profitable first-party software. But Sony still foresees record earnings of 180 billion yen for the year.
The stock market has rewarded Sony for the earnings bonanza, with the share price enjoying an upward trajectory since the start of the year and now reaching nine-year highs. Market capitalization tops 5.6 trillion yen, putting Sony in 13th place on the Tokyo Stock Exchange's first section.
Mixed results and mixed media
But concerns still lurk. Demand for image sensors can prove as volatile as they come, and a downturn dented Sony in the past.
The motion pictures division, which booked losses topping 100 billion yen in the previous fiscal year, has yet to make a full recovery. The new "Spider-man" movie is a global hit, but it remains to be seen how Sony will get a handle on ballooning costs. Tony Vinciquerra, who took over Sony Pictures Entertainment in June, still needs to prove his mettle.
In the spring, Hirai began ordering staff to take full stock of the group's intellectual properties, which span a wide spectrum of movies, music and games. "That diversity contains both opportunities and issues," Yoshida said.
Sony unveiled its first original smartphone game last week, along with plans to make stage and anime adaptations of that franchise. "We'll see how organically we will link our group's platforms," Yoshida said. Though that statement references a problem Sony has been tackling for years, it does not suggest a clear path to a resolution.
Yoshida kept repeating Tuesday that it has been only three months, not once talking up the impact of the positive earnings numbers. He appears to be sending the message that, this time, things are going to be different.